Even as the government and RBI are trying to lure in more dollars into the country, flows from non-resident Indians into bank deposits has been falling. During April-June, NRIs put $5.50 billion into Indian banks' deposits, down 16.11% from a year ago.
As on June end, NRIs held $71.07 billion in bank deposits, marginally lower than $71.69 billion in May. The sharp volatility in the rupee may have prompted NRIs to refrain from putting money into bank deposits. The rupee weakened 2.4% during June and has since then fallen to fresh all-time lows of 61.81/$.
Expectations that the rupee could weaken more may also prompt NRIs from bringing in dollars and investing in bank deposits.
Finance minister P Chidambaram has said that the government would look at issuing quasi-sovereign bonds through state owned enterprises to bring in dollars into the country and prop up the rupee.